what to know before investing in an rsp

If one of your New Year's resolutions is to start saving for retirement by investing in a registered savings plan (and it should be!), we're here to make the process a bit easier for you.

We've come up with a list of five questions you should ask your financial analyst before investing with them — from how much money you'll need to start saving to enjoy comfortable post-work life to how RSPs can improve your well-being now.

1

What are your credentials and history?

Whenever you approach a financial institution for advice, be sure to ask your analyst about their education. What are their credentials? Where did they go to school? How do they keep abreast of what's happening in the financial markets? You should invest your money only in people and outlets that have a good track record with their customers.

2

What is an RSP?

This may seem like a silly question, but there are a whole lot of little things to learn about these financial accounts. Can you withdraw money from your plan at any time? (The answer is yes, but a hefty cost is associated with the transaction.) What happens to your RSP when you die? (You'll want to set up a beneficiary.) What is your maximum tax-deductible RSP contribution? (There is a limit to how much you can save in these funds each year if you want to receive a tax break).

3

Why an RSP?

If you don't know the first thing about saving for your retirement, you'll want your chosen financial expert to explain the ins and outs of RSPs to you. For example, did you know investing in one helps you pay less tax now while also building a larger retirement income for your future? (Contributions reduce your overall taxable income.) You'll also want to learn about the differences between RSPs and, say, tax-free savings accounts (TFSA) — they have different benefits.

4

How much money will I need to retire?

Whether you've already started saving for "Freedom 55" or if you have a long way to go (meaning, you haven't put a penny into an RSP), asking this question will ensure you get on a sustainable savings track. An analyst will be able to tell you — using a retirement calculator, like TD's retirement savings calculator — how much money you need to start socking away now to ensure you retire at the age you want.

5

What do you offer?

Most financial institutions offer a range of RSPs and other retirement options to choose from, and each can be tailored to your retirement needs and general savings goals.